Riyadh – Mubasher: AlJazira Capital set a target price on Yamama Cement at SAR 22.40 per share, maintaining “Overweight” recommendation.
“Based on our estimate, the company is trading at forward P/E and P/B of 11.21x and 0.90x respectively for FY2017,” the research firm said.
The cement company’s net income for the fourth quarter of 2016 recorded a deviation of 63.3% from AlJazira Capital’s estimates and 62.2% from the market consensus of SAR 113.8 million.
Arabian Cement Company reported a decline in net profit by 84.36% year-on-year to SAR 24 million in Q4-16 compared to SAR 153.5 million.
The decrease in gross profit by SAR 125 million is a result of a decline in sales volume and prices, in addition to the increase in general and administrative expenses by around SAR 3 million, the statement indicated.
Revenue stood at SAR 232.9 million; lower 33.9% year-on-year, which came below the estimates of SAR 262.7 million which is mainly attributed to decline in selling prices and volumetric sales.
Yamama Cement sales in 2016 fell 8% year-on-year compared to 9.4% year-on-year decline for the market:
“We expect cement dispatches for 2017 to be muted due to current economic environment,” AlJazira Capital reported.
AlJazira Capital noted that the government’s plans to lift subsidy on the provided fuel in 2019, which will increase production cost and affect profitability, saying “therefore, we have adjusted our model to reflect the increase in fuel prices.”
